As chairman of the Federal Deposit Insurance Corp., Jelena McWilliams isn’t afraid to challenge the status quo. 

In her 17 months at the helm of the 86-year-old regulatory agency, the former vice president and chief legal officer of Fifth Third Bank has been vocal in her call to revisit outdated regulations.

To get a pulse for the industry, McWilliams is in the middle of a nationwide “listening tour," visiting with banks from each state and gauging what regulations are helping or harming financial institutions. 

"I have realized that nothing informs your opinion as well as a grassroots effort," McWilliams told Banking Dive. 

McWilliams said she has done 26 state visits to date, where she has been asking community banks questions including, "What worries you? What are you concerned about in the future? What do your competitors do that you can't do?"

"It has been an invaluable learning experience for me as we look to shape regulation for now but also for the coming decades," McWilliams said. 

Banking Dive caught up with McWilliams during the Money20/20 conference in Las Vegas last month to learn more about her goals for the agency and what disruption means to her.

This interview has been edited for clarity and brevity. 

BANKING DIVE: During your keynote, you talked about how the U.S.’s financial services industry is the most vibrant in the world. What do you think is the greatest threat to that status?

JELENA MCWILLIAMS: There are the nefarious threats to the system, from the bad actors that we always need to be cognizant of, in terms of stealing our technology and violating our intellectual property laws and the cyberattacks and hacking. 

That aside, I think the biggest challenge we have is not allowing innovation to happen, or standing in the way of technological developments that could make the system better. Not understanding how that technology is deployed and being so risk averse that we say 'no.' The flip side of that is not understanding, and allowing it to go through and become a standard or become acceptable, and then not understanding the negative impact that technology could have.

From the regulatory perspective, our regulatory framework needs to function so that the right type of innovation is encouraged.

You’ve said the FDIC won’t issue any guidance on marijuana banking so long as the drug is illegal at the federal level. Would the passage of the Secure and Fair Enforcement (SAFE) Banking Act change that?

MCWILLIAMS: Potentially. The question is, what would be in that bill by the time it passes, if it passes? And what exactly would the instructions to the regulators be?

It just depends on how the bill moves through Congress, if it does.

You said you're looking for a disruptor to fill the chief innovation officer position at the FDIC’s new office of innovation. What does "disruptor" mean to you?

MCWILLIAMS: A disruptor to us at the FDIC is somebody who understands technology, is not a regulator, is preferably not a Washington insider, but somebody who actually has created technology or developed technology. Someone who took it from a concept stage to production, and rolled out either consumer products or services that are banking in nature and understands what the regulatory framework is.

We're not looking for somebody who is a regulator per se, or somebody who knows exactly how regulatory agencies work. We have 6,000 employees within the FDIC who can teach that person how regulation works and examination, supervision and legal issues regarding regulatory agencies, but we're looking for a person who has actually developed technology and understands technology who is able to come in and ask the right questions and focus on why not instead of why.

Our system has been such that we have been just very reluctant to approve innovation. And that needs to change.

Why do you think that’s the case?

MCWILLIAMS: Regulators are just risk averse. You're so much better off just saying 'no' than saying 'yes' and then having some kind of crisis happen. And everybody points the finger to your yes. It would be much easier for us to say no to everything. That would be the easiest job I've ever had.

But that would also ensure that our regulatory system is discouraging innovation, and that innovation is happening elsewhere and not the United States of America.